Archive for Tuesday, June 20, 2006

Gas is cheap?

June 20, 2006


To the editor:

The price of crude oil is up because demand is up. However, the CEOs of ConocoPhillips, Shell and Chevron told me on "Meet the Press" that gas is cheap. This is great to know. All I have to worry about is the high price.

I'm no economist, but this sounds like a marriage made in energy heaven (Cheney's office) between Reaganomics and Voodoo economics.

Don Brennaman,



xenophonschild 11 years, 3 months ago

Say "thank you" to conservative Republican thieves who view their elevation to political power after 40 years of Democratic rule merely as an opportunity to loot the government for their super-rich constituency.

Jamesaust 11 years, 3 months ago

Gas is cheap.

How do I know? Because my neighbor fires up the Hummer to make a quick run to the convenience store to buy a gallon of milk. I'm pretty sure more is spent on the gas (let alone the Hummer) than the milk.

Besides, the real point is not the price. Its that the supply is guaranteed. When was the last time you couldn't find any gas to buy? And why do you take that fact for granted?

Jamesaust 11 years, 3 months ago

scenebooster -

Those are very interesting comments.

I'll take your word about the percentages as they sound about right to me. Gas has risen from record lows to the current just SHORT of record highs over the last decade (we've paid more in both absolute and relative terms). Of course, the record lows weren't very good either. Oil companies weren't able to provide a return to their shareholders. Exploration was discouraged as was investment in alternative fuels. And consumers were - quite literally - bribed into consuming far more gas than they otherwise would ever have used (hence, the rise of the SUV, let alone the Hummer).

Averaged over the longrun, even the last year or two's record profits for oil companies doesn't make them stars on their return to shareholders. Many industries do better but no one seems to put much effort into denouncing those industries "excess" profits. So, I can understand why many aren't happy at profits based on $75/bar. oil but then they weren't exactly in tears when those profits evaporated at $15/bar. oil just a few years before (were they?). Indeed, it is precisely the oil companies who ignored the low prices a decade ago and poured money into exploration anyway (MUCH criticized by their shareholders at the time) who now are reaping the rewards for their risks. If it had worked out the other way, would you be crying over bankrupt oil companies today?

"how do you come to the conclusion that "supply is guaranteed"?

Well, by the question I already tossed out there: "when was the last time you couldn't find any gas to buy"? I assume you are part of the masses that just assume that condition (plentiful supply) is "natural" and happens independently of price. That would not be correct - a point most famously demonstrated by the gas price caps imposed by law in the early 1970s, which created limited supplies and shortages for all.

anonimiss 11 years, 3 months ago

Copper, Aluminum, Steel, Iron, Wood, pretty much anything right now has risen near 100% since before Katrina. Causes: A rising demand from China coupled with a disruption in production and shipment from the two hurricanes. Increased demand in the aftermath of the hurricanes also factored in, along with building code changes, created a 'perfect storm' for inflation.

So why is it that gas is the only one people concentrate on? God forbid you pay more for a gallon of gas than your liter of bottled water. Say you use one 10 gallon tank of gas a week. The $1 difference per gallon costs you $10 per week. If you've got your life planned out to $10, you've got something wrong.

And how is it the administration's fault? Bush signed a law requiring more ethanol to be used in the future. He wanted to drill for oil here instead of paying Arab countries.

And about the big oil companies- $0.184 per gallon goes to the national government, $0.25 per gallon goes to the Kansas government, $1.64 per gallon goes to crude oil. Factor in 15% for refining the oil into gas, 10% for getting the gas across the country. Doesn't leave much to gouge.

And to follow up on Jamesaust, when nearly every single person in this country buys gas, spending about $40 or so a week, of course they're going to have record profits. They have record sells. Follow their margin of profit, and you'll realize just how wrong you guys are.

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